Ircon International Stock Slips On Government’s Stake Sale Plan
Shares of Ircon International Ltd. declined after the government announced its plan to pare stake in the railways public sector unit.
The government proposed to offload 4.7 crore shares or 10% of the total equity in Ircon, with a green shoe option to sell an additional 2.8 crore shares or 6% of the total equity through an offer-for-sale, according to an exchange filing.
The floor price was fixed at Rs 88 apiece, a 10.2% discount to Tuesday’s closing price. That, according to BloombergQuint’s calculation, would fetch the exchequer close to Rs 660 crore on sale of the 16% holding.
As of December, the government owned an 89.18% stake in the infrastructure construction services provider. After a successful sale of the 16% stake, its holding will come down to 73.18% — in line with the minimum public shareholding requirement.
Before Ircon, the government in January had raised Rs 2,664 crore through an offer-for-sale in Steel Authority of India Ltd., which subscribed more than five times. It also raised over Rs 4,000 crore by selling a 20% stake in online ticketing service provider IRCTC Ltd. in December 2020.
The government, according to the Union Budget documents, aims to garner Rs 1.75 lakh crore through divestments in 2021-22. In FY21, the government had budgeted to raise Rs 2.1 lakh crore through divestments but fell short.
Shares of Ircon International fell as much as 6.7% in early trade on Wednesday to Rs 91.3 apiece — the lowest in nearly a month.